AER and AG
[2004] FMCAfam 641
•19 November 2004
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| AER & AG | [2004] FMCA 641 |
| FAMILY LAW – Property settlement – short marriage, no children – dispute between parties as to period of cohabitation – evaluation and assessment of parties’ respective contributions – whether capital disparity warrants adjustment pursuant to s.75(2) factors. |
Family Law Act 1975
Pastrikos (1980) FLC 91-987
Lee-Steere (1985) FLC 91-626
Ferraro (1993) FLC 92-335
Clauson (1995) FLC 92-595
Whitely (1996) FLC 92-684
Norbis (1986) FLC 91-712
McMahon (1995) FLC 92-606
Hickey (2003) FamCA 395
Davut & Raif (1994) FLC 92-503
Prpic (1995) FLC 92-574
Townsend (1995) FLC 92-569
Biltoft (1995) FLC 92-614
McLay (1996) FLC 92-667
Phillips (2002) FLC 93-104
JEL & DDF (2001) FLC 93-075
Russell (1999) FLC 92-877
OSF & OJK [2004] FMCAfam 63
Leslie [2004] FMCAfam 357
Bremner (1995) FLC 92-560
Way (1996) FLC 92-702
Money (1994) FLC 92-485
Pierce (1998) 24 FamLR 377
Waters & Jurek (1995) FLC 92-635
Gill (1984) 9 FamLR 969
Prestwich (1984) 9 FamLR 1069
Aleksovski (1996) 20 FamLR 894
Brandt (1997) 22 FamLR 97
VJ & CJ (1997) 22 FamLR 166
Dickson (1999) 24 FamLR 460
Collins (1990) 14 FamLR 563
Farmer & Bramley (2000) 27 FamLR 316
| Applicant: | AER |
| Respondent: | AG |
| File No: | MLM 5151 of 2001 |
| Delivered on: | 19 November 2004 |
| Delivered at: | Melbourne |
| Hearing date: | 20 June 2003 |
| Judgment of: | Walters FM |
REPRESENTATION
| Counsel for the Applicant: | Ms Nancarrow |
| Solicitors for the Applicant: | Stephen A Canals |
| Counsel for the Respondent: | Mr Robinson |
| Solicitors for the Respondent: | Alan Wainright & Co |
ORDERS
I shall hear Counsel as to the precise orders that will be necessary to give effect these Reasons.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLM 5151 of 2001
| AER |
Applicant
And
| AG |
Respondent
REASONS FOR JUDGMENT
Introduction
Before the Court are the parties’ competing applications for property settlement.
The husband was born in August 1947. He is now 57. The wife was born in January 1964, and is now 40.
There is a dispute between the parties as to the date upon which they commenced cohabitation. The wife asserts that it was in mid 1997. The husband says that it was in September 1998.
The parties married on 3 November 1999.
Once again, there is a dispute between the parties as to the date upon which they separated. The wife seemed to suggest that the parties finally separated on 2 August 2002. The husband says that they separated in May 2000.
The husband was born in Cairo, Egypt. He migrated to Australia in 1972 and is an Australian citizen. He has been married twice before. His first marriage lasted from 1973 to 1990. He was divorced in May 1996. There are two children of that marriage — M (now aged approximately 21) and T (now aged approximately 17).
The husband’s second marriage was very brief. He was married in December 1996 and a decree nisi of dissolution of marriage was granted on 9 July 1998. There are no children of the husband’s second marriage.
The wife has also been married previously. The court was provided with very few details of her previous relationship. It appears that she has children from her first marriage — one of whom (S) lived with the parties at some stage during their relationship.
Neither the husband nor the wife has repartnered following the breakdown of the marriage.
Orders Sought
Both parties filed Case Outline Documents.
The wife sought orders to the effect that the net proceeds of sale of a property previously owned by the husband in San Remo be divided between the parties as to one third to the wife and two thirds to the husband. Given that the net proceeds of sale of the San Remo property were approximately $155,000.00, the wife (in effect) sought that she be paid the sum of $51,660.00 (or thereabouts).
The orders sought by the husband were to the effect that the wife be paid the sum of $7,500.00 from the proceeds of sale of the San Remo property.
The Law
The general approach that should be adopted by the court in relation to a property settlement application has been described in many cases[1]. The court must first identify the property of the parties. It must then attribute a value to each item of property — usually as at the date of the hearing. Thereafter, it must assess the extent of each party’s contributions under the various sub-headings described in section 79(4) of the Family Law Act. Finally, the court must consider the financial resources, means and needs of the parties, and the other matters set out in section 75(2) so far as they are relevant. An adjustment of the amount due to each party by way of contribution is then made by reference to the section 75(2) factors. It is not essential, however, that such an adjustment take place. Generally speaking, an adjustment is made because one party has greater needs and the other has stronger means.
[1] see, for example, Pastrikos (1980) FLC 91-987, Lee-Steere (1985) FLC 91-626, Ferraro (1993) FLC 92-335, Clauson (1995) FLC 92-595 and Whitely (1996) FLC 92-684
In relation to the contribution of the parties under section 79(4) generally, it has been held that a “global” approach will usually be more convenient than an “asset by asset” approach — although the application of an asset by asset approach does not (of itself) amount to an error of law[2].
[2] see Norbis (1986) FLC 91-712
Section 75(2) is concerned with the process of arriving at a just and equitable result. It follows that there may be circumstances in which the justice and equity of the case, and the specific provisions of section 75(2), support an adjustment in a party’s favour for matters which cannot comfortably be described as being of financial or economic significance.[3]
[3] see McMahon (1995) FLC 92-606 at 82,043
Under section 79(2), the court is required to be satisfied that the order to be made is just and equitable — and not simply that the underlying percentage division of the net value of the parties’ assets is appropriate. In other words, in the consideration of whether the overall result of property settlement proceedings is just and equitable, it is the justice and equity of the actual orders, and not of the percentage distribution, which must be considered[4].
[4] see Russell (1999) FLC 92-877
Section 79(2) and the so called "Fourth Step"
One of the most recent authorities dealing with the correct approach to be applied in property settlement cases is the Full Court decision in Hickey (2003) FamCA 395, where their Honours said:
The case law reveals that there is a preferred approach to the determination of an application brought pursuant to the provisions of s.79. That approach involves four inter-related steps. Firstly, the Court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the Court should identify and assess the contributions of the parties within the meaning of ss.79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the Court should identify and assess the relevant matters referred to in ss.79(4)(d), (e), (f) and (g), (“the other factors”) including, because of s.79(4)(e), the matters referred to in s.75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the Court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case: Lee Steere (1985) FLC 91-626; Ferraro (1993) FLC 92-335; Davut & Raif (1994) FLC 92-503; Prpic (1995) FLC 92-574; Clauson (1995) FLC 92-595; Townsend (1995) FLC 92-569; Biltoft (1995) FLC 92-614; McLay (1996) FLC 92-667; JEL & DDF (2001) FLC 93-075 and Phillips (2002) FLC 93-104. (Emphasis added)
Notwithstanding the Full Court’s reference to four steps in the above passage, it is my view that the testing of any proposed orders by reference to section 79(2) is not a fourth substantive step (properly so called) in the property settlement exercise.[5]
[5] See OSF & OJK [2004] FMCAfam 63; (2003) 179 FLR 222; FLC 93-191 and Leslie [2004] FMCAfam 357.
In applying s.79(2), the Court has power to adjust the form, structure or balance (for want of a better description) of the orders that the court is minded to make in order to give effect to its conclusion as to the parties’ respective entitlements after the application of the fist three steps mentioned in Hickey. In other words, the determination of the proportional or other distributional division of the parties’ property between them must necessarily be concluded before the court considers the justice and equity of the actual orders that are to be utilised to give effect to that distribution or division.
Period of Cohabitation
A significant part of the trial was occupied by endeavouring to determine the period during which the parties actually lived together.
In her affidavit sworn 21 October 2002, the wife said:[6]
The husband and I commenced our relationship in early 1997 and commenced living together in about mid 1997. We subsequently married on 3 November 1999. … after a number of short periods of separation due to difficulties in our relationship, we finally separated on 2 August 2002. We are still married.
[6] See paragraph 3.
Later in the same affidavit, however,[7] the wife said that the parties “finally separated” on 2 August 2000. The same date was mentioned in the wife’s case outline — and I note that the proceedings in this Court commenced with the filing of the wife’s application for property settlement on 22 May 2001 (and procedural or other orders were made on 26 June 2001, 4 February 2002, 1 July 2002 and 31 October 2002).
[7] See paragraph 15.
In paragraph 4 of his affidavit sworn 4 June 2003, the husband said:
I first met the applicant in late 1997. We cohabited at various times between September 1998 and May 2000. We lived together for two weeks in 1998 at a flat in Jetty Road, Rosebud. Centrelink informed the applicant that she would lose her Newstart benefits if she remained with me, so she left. In September 1998, I rented a property in Panorama Road, San Remo and we lived there together for approximately 6 weeks and then another two weeks until 2 January 1999. The wife then lived on her own in Queensland from January to September 1999, except for a few weeks in April 1999. We also lived together for three to four months in total between September 1999 and May 2000 when the applicant finally left the San Remo home.
Later in his affidavit, the husband said:
After our final separation in May 2000, I had no contact with (the wife) for six months… In or about November 2000, (the wife) telephoned me seeking my help after she had a car accident. … Over the next three or four weeks I assisted her in finding shared accommodation in Moreland Road, Brunswick and contributed $200.00 towards her bond. In this period (the wife) telephoned me constantly, sometimes friendly and sometimes aggressive. In early 2001, I again assisted (the wife) in obtaining accommodation at a flat in Sunshine… Matters between us were still stormy. Sometimes (the wife) wanted to reconcile with me and at other times she was very hostile towards me.
Soon after (the wife) moved to Sunshine we again argued. I did not see her for three or four months when (the wife) telephoned me in mid 2001. She wanted us to live together again and she proposed a trip. We went on a holiday to Queensland for two weeks, but we constantly argued and the trip was not a success. …
(The wife) and I had no contact for two to three months after the Queensland trip. In January 2002, she telephoned me and told me that she was now living in Frankston. Although the court proceedings had already commenced, (the wife) proposed that she withdraw the proceedings so that we could reconcile. I did see her one or two times a week for a period of four weeks at this time and I believe she did withdraw the proceedings only to re-commence them again. Over the past nine months (the wife) has telephoned me constantly — as often as three to four times a day.
In her affidavit sworn 21 October 2002, the wife asserted that it was the husband who had sought a reconciliation.
In paragraph 17, for example, she said:
During 2001 I was being constantly contacted by the husband wanting a reconciliation or at least an acknowledgement from me that our relationship could continue on a civil basis notwithstanding that out marriage was effectively over.
The wife said that she discontinued the proceedings in early 2002 because she was being “constantly harassed” by the husband, who “… was putting pressure on (her) to discontinue (her) claim”.
In paragraph 7 of her affidavit sworn 20 May 2003, the wife said:
I agree there were short separations following arguments between us. (The husband) would also ask me back and I would return. I deny I spent most of 1999 in Queensland.
Annexure REA9 to the affidavit sworn by the wife on 21 October 2002 is a letter dated 6 October 2001 from Centrelink to the wife. The wife refers to the letter in paragraph 9 of her affidavit, saying “… there is one error in this letter, concerning the date of commencement of my relationship with the husband”. The contents of the letter are as follows:
Dear Ms AER
As per your request to Centrelink regarding our records of your marital status the information on our records is as follows:
· 14 September 1998 started de facto relationship with AG;
· 13 October 1998 separated from AG;
· 10 February 1999 started de facto relationship with AG;
· 9 March 1999 separated from AG;
· 29 September 1999 started de facto relationship with AG;
· 3 November 1999 married AG;
· 10 December 1999 separated from AG.
· This is an information notice given under the Social Security law.
During cross-examination, the wife said that, although she is afraid of the husband she still loves him. She later said that she had not been “completely honest with Centrelink” and that there was more than one error in the letter from Centrelink referred to above.
During cross-examination, the wife also said that:
a)she could not remember dates (because of the husband’s physical abuse of her);
b)annexure REA2 to her affidavit sworn 21 October 2002 (being a copy of an electricity account addressed to the wife) does not support her assertion that she and the husband were living together during the period referred to in the account (being 28 October 1997 to 2 February 1998);
c)she was in Queensland in 1999 long enough to open and operate a bank account in that State; and
d)the parties had “one of their separations” around 2 August 2002.
The wife failed to give a satisfactory explanation as to why the extended period that she spent in Queensland in 1999 was not dealt with in her principal trial affidavit, and why no details were provided of the places in which the parties allegedly lived after the separation in August 2000.
Although the husband’s evidence in relation to the periods of cohabitation was not always consistent (and reflected his overall desire to minimise the wife’s contributions during their relationship, and hence her entitlement by way of property settlement), I prefer his evidence — in relation to this subject — to that of the wife. Her evidence as to the periods of cohabitation was most unsatisfactory. Whilst giving evidence is clearly a stressful experience for a litigant, and whilst nervousness and anxiety on the part of the wife are to be expected in such circumstances, I do not accept that such factors can adequately explain the inadequacies and inconsistencies in the wife’s evidence. I do not accept that the wife was open and candid with the court in relation to this subject.
In all the circumstances, I find that the most accurate record of the parties’ periods of cohabitation is likely to be that contained in the letter dated 6 October 2001 from Centrelink to the wife.
Accordingly, I find that the parties commenced cohabitation on 14 September 1998. Further, I find that the relevant periods of cohabitation were as follows:
a)14 September 1998 to 13 October 1998;
b)10 February 1999 to 9 March 1999;
c)29 September 1999 to 10 December 1999; and
d)Mid December 1999 to 2 August 2000.
Although the period referred to in sub-paragraph (d) of the previous paragraph is not referred to in the letter from Centrelink to the wife, the husband’s first affidavit (sworn 14 October 2002) makes no mention of the parties separating between the date of marriage (3 November 1999) and the date upon which he then asserts that the parties separated (being 2 July 2000). As well, the husband said that, although the parties separated on or about 10 December 1999, they resumed cohabitation “before Christmas”. I am prepared to accept that the parties separated for a short time only in December 1999, and that they remained together until 2 August 2000. Even if I am wrong in that regard, and the parties in fact separated on 2 July 2000 (or thereabouts), the error would make no difference to my decision in relation to the subject of property settlement.
Based upon the findings set out above, it is clear that the parties lived together for a total period of approximately 11 or 12 months. That is not to say, of course, that the parties did not have a different form of relationship at various times between mid 1997 and early 2002, but the nature of that relationship (or those relationships) can not be properly or fairly categorised as “cohabitation” in the usual sense.
Property and Liabilities as at Date of Trial
The first step in the property settlement exercise relates to the identification and valuation of the property of the parties at trial.
I find that the property and liabilities of the parties are as follows:
Moneys held in trust (being net proceeds of sale of
the property at 73 Philip Island Road, San Remo) (approximate figure only)$155,000.00
Husband’s motor vehicle
2,750.00
Husband’s credit card debts
(16,000.00)
Wife’s debts
(3,900.00)
Total
$ 137,850.00
It can be seen from the above that the total net value of the parties’ property is approximately $137,850.00.
Some matters relating to items included in (or excluded from) the above schedule require explanation.
Agreed Figures
The values to be attributed to the following items were agreed:
· net proceeds of sale of the San Remo property (approximation only); and
· husband’s motor vehicle.
Wife’s Motor Vehicle
The husband alleged that the wife had a motor vehicle in her possession, and that its value was between $2,000.00 and $3,000.00. No such vehicle was referred to in the wife’s financial statement, and the wife was not cross examined (or effectively cross-examined) about the existence or value of the car. During her opening, Ms Nancarrow (for the wife) said that the car was “a total loss following a motor vehicle accident”. In all the circumstances, I am not prepared to include such an item in the schedule of assets available for distribution between the parties.
Husband’s Credit Card Debts
The husband asserted that he had credit card debts amounting to $16,000.00. He was not cross examined in relation to the subject, and I therefore accept that the debts exist and that they should be taken into account.
Wife’s Debts
According to the wife’s financial statement sworn 13 May 2003, her total liabilities amount to $3,900.00. As she was not cross examined (or cross-examined effectively) regarding these liabilities, I see no reason why they should not be included in the schedule of assets and liabilities.
Costs Order
The husband sought to include a liability that he was obliged to pay in respect of a costs order made against him in the current proceedings. In my opinion, it is inappropriate to include the costs order in the schedule of assets and liabilities available for distribution between the parties. It is more convenient to ignore the order altogether than to include it and treat it as being a “negative contribution” (as it were) of the husband.
Short History of Relationship
Before dealing with the issue of the parties’ contributions (in all their various guises), it is necessary to outline relevant aspects of the parties’ relationship.
It seems clear that the parties first met in 1997. At that time, the husband was the proprietor of a business known as “Rosebud Pizza” in Nepean Highway, Rosebud. I accept the husband’s evidence that, the parties became friends when the wife commenced attending the husband’s shop.
As the parties’ relationship developed, the wife commenced assisting the husband in the Rosebud Pizza business on an informal basis.
The parties did not live together until approximately June or July 1998, when they shared a unit in Jetty Road, Rosebud for a period of a few weeks. The wife then moved to a property in Berwick. They did not start to cohabit in a de facto relationship until September 1998.
During 1998, the wife established a small, supplementary business operating from the premises of the Rosebud Pizza shop. She called the business “Rosebud Café”. Annexure REA7 to the wife’s affidavit sworn 21 October 2002 reveals that the Rosebud Café operated between the hours of 10 a.m. and 2.30 p.m. on a daily basis (except for Tuesdays). Rosebud Pizza appears to have only been open during the evenings.
The husband spent a modest amount of money refitting the shop so that it could operate as a café at lunch times. It continued to operate as Rosebud Pizza in the evenings. The husband said, and I accept, that he paid for new blinds, tablecloths, a fridge, a bain-marie, new cutlery, new lighting and signage. I also accept the husband’s evidence that the wife did not pay any rent for the use of the premises, and that all or most of the expenses associated with the premises (including the cost of the food served in the café) were met by the husband.
The café operated for no more than two or three months, and closed at or around the time that the wife moved to Berwick.
In or about August 1998, the husband decided to close the Rosebud Pizza business. In paragraph 12 of his affidavit sworn 14 October 2002, the husband said that he closed the Rosebud Pizza shop because of his health. He said:
I kept all the shop fittings and gave them to my son, M, for him to start a business on Phillip Island. I went on to a disability pension because of my blood pressure, stress and depression. I am still on that pension, which was granted on 17 September 1998.
The husband’s son, M, was only sixteen in late 1998 — but I accept that one of the husband’s reasons for acquiring a business in San Remo (adjacent to, but not on, Phillip Island) was his desire to assist his son.
The husband purchased a shop known as Shop 1, 71-73 Phillip Island Road, San Remo in late August 1998. The purchase price was $55,000.00. In addition to the freehold, the husband purchased fittings for a total of $13,000.00. He also spent approximately $7,000.00 refurbishing the premises.
In order to finance the purchase, the husband borrowed $32,000.00 from the National Australia Bank and approximately $43,000.00 from Citibank. It follows that the whole (or virtually the whole) of the purchase price was borrowed by the husband.
The wife alleged that she “carried out all negotiations with the local real estate agents which eventually led to the husband purchasing the property at 73 Phillip Island Road”. I do not accept the wife’s evidence in this regard, and find that, although the wife may have accompanied the husband to look at the property, and may have spoken with real estate agents, it was the husband who decided upon the property, and who negotiated the ultimate purchase price. Similarly, I find that, although the wife may have assisted the husband with the arrangements necessary to enable him to borrow funds from the National Australia Bank, her overall involvement in the transaction was minimal.
Concurrently with the purchase of the shop premises, the husband registered the business name “AG Family Pizza San Remo”. The Business Affairs Business Names Details form reveals that the “person carrying on business” under the name AG Family Pizza San Remo was to be the husband’s son, M.[8]
[8] See Exhibit REA13 to the wife’s affidavit sworn 21 October 2002.
Having established the AG Family Pizza business, the parties moved to leased residential premises at 65 Panorama Drive, San Remo, a few minutes walk from the shop. The husband concedes that both parties’ names were on the lease of the flat. The wife’s son, S, and the husband’s son, M, lived with the parties.
The husband asserted that the wife did not assist in the relocation from Rosebud to San Remo. He was prepared to concede, however, that the wife’s son, S, helped with the move. I do not accept the husband’s evidence in this regard, and find that he has endeavoured to minimise the wife’s role in the move. I find that she played a supporting role in the activities associated with the move (even if she did not involve herself in the physical activity to a great extent).
The husband, the wife and M were all involved in the establishment and promotion of the business in San Remo. Clearly, the husband had experience in conducting a pizza outlet, and I am satisfied that all three worked hard (in the initial stages of the business) to make the venture a success.
As I have found elsewhere in these Reasons, however, the wife’s involvement in the business was intermittent. Although the business commenced in or about early September 1998, the parties lived apart between 13 October 1998 and 10 February 1999. They separated again about a month later (9 March 1999), and the wife did not return to live with the husband until 29 September 1999. They separated again on 10 December 1999 (although they reconciled a short time later). They finally separated in or about early August 2000.
The husband’s son, M, gave evidence in the proceedings. He said that he lived in the Panorama Drive property from approximately October 1998 until early 2000. He said, and I accept, that the wife was “hardly ever there”. I do not accept, however, that M was the beneficial owner of AG Family Pizza. The thrust of his evidence was that he was in the business to assist his father (and, indirectly, himself). I find that the husband managed the business, whilst at the same time teaching M how to run it. The financial aspects of the business were effectively in the hands of the husband — who did the banking. Income from the business was used to meet the liabilities incurred by the husband in acquiring it.
I find that the husband has minimised the wife’s role in AG Family Pizza, and that the wife has exaggerated her role. Both worked in the business (although the wife worked far less than did the husband or M — or S, for that matter — because she was not in San Remo for much of the time). Both endeavoured to maximise its profitability. I also find that M has exaggerated his role in the business. As I have already indicated, I do not accept that he was its beneficial owner.
I accept that, notwithstanding the efforts of the husband, M and S (and the wife when she was in San Remo), AG Family Pizza was not a financial success. It closed in mid 2000.
I accept that the wife assisted in setting up the shop, and assisted with physical work such as laying tiles, interior painting and decoration. I also accept that the wife assisted with deliveries of pizzas. The wife also dealt with product salesmen, ordered stock, did some banking and assisted with waitressing tasks. I accept that she also cooked. Overall, however, I find that her efforts in the business were no greater than those of the husband or M — whilst she was in San Remo. Obviously, her contributions to the business whilst she lived away from San Remo were non existent.
In May 2000, the husband sold a residential property at 50 Phillip Road, East Keilor. He had purchased the property in or about August 1997 (before he commenced living with the wife). He became the registered proprietor of the property on 10 February 1998. The purchase price was $110,000.00.
The sale price of the East Keilor property was $188,000.00. After paying out approximately $124,000.00 in respect of the mortgage then encumbering the property, the net proceeds of sale were used to repay the loans associated with the acquisition of the shop in San Remo. The husband also paid out moneys owing in respect of certain credit card debts.
The parties continued to be in contact (from time to time) after they finally separated in August 2000. Although each may have desired a reconciliation at different times, their relationship was characterised by ongoing friction. I accept that they may have spent periods of a few days together (or even slightly longer periods), but, I find that they did not resume cohabitation after August 2000.
After separation, the wife moved to rented accommodation. She worked as a shop assistant in a city café for approximately three months. At the time of the trial, she was living in community housing provided by the Department of Housing and was in receipt of Centrelink benefits. Her intention was to return to study at TAFE. She hoped to become a fitness instructor. She had minimal income and no assets or financial resources.
The husband continues to receive a disability pension from Centrelink. Because of his age and state of health (and his less than perfect English), he considers himself effectively unemployable.
I accept that the husband purchased a motor vehicle for the wife (at a cost of approximately $4,000.00), and that he also gave her modest amounts of cash, and some gifts, during their relationship. I also accept that the husband provided the wife with some financial assistance after separation. For example, he assisted her in obtaining accommodation in a flat in Sunshine, and paid the bond and the first month’s rent.
Observations Regarding the Parties’ Evidence
In my view, some of the parties’ comments reflect unfavourably on the makers of those comments, and are regrettable. I find that neither party coped well with the breakdown of the marriage, and that both sought out the company of the other from time to time after separation in or about August 2000.
To the extent that the husband’s affidavit material suggests that the wife was manipulative, dishonest, greedy, financially irresponsible and lazy, I find that the wife was none of those things. I find that the husband has failed to give the wife credit where such credit was due.
Similarly, to the extent that the wife’s affidavit material suggests that the husband was vindictive, manipulative, dishonest, financially irresponsible, uncaring, controlling, secretive, threatening and violent towards her, I find that the husband was none of those things.
I find that both parties had hoped that their relationship would last, and that they would enjoy financial security together.
Neither party was cross examined in relation to many of the allegations that the other had made against him/her. It is to the credit of counsel for the parties that no such cross examination took place. At the end of the day, the parties’ criticisms of each other are of no real relevance to the issues that must be determined in these proceedings. To the extent that the attitude or behaviour of one or the other of the parties might be relevant, I shall make reference (or have already made reference) to it in its appropriate context.
Contributions
There can be no doubt that the husband’s initial financial contributions to the relationship significantly outweighed those of the wife. The husband had recently acquired the East Keilor property for $110,000.00 (see exhibit H6). That property was encumbered by a mortgage. It is difficult to ascertain from the material before the Court the precise amount that was owing in respect of the mortgage. In paragraph 5 of his affidavit sworn 4 June 2003, however, the husband suggested that the East Keilor property was subject to a mortgage under which approximately $44,000.00 was owing. In the Summary of Argument prepared by Mr Robinson (for the husband) it was suggested that approximately $82,000.00 was owing in respect of the mortgage — although that figure may well include moneys borrowed for the purpose of the acquisition of the San Remo property. The husband also asserted that he owned a motor vehicle worth approximately $15,000.00 and Commonwealth Bank shares (which were subsequently sold for approximately $10,000.00).
I am not aware of the fate of the Commonwealth Bank shares (or, perhaps more accurately, the proceeds of sale of the shares). The husband alleged that the car that he owned at the commencement of cohabitation was stolen in 1999, and that he received approximately $3,000.00 “ … under its insurance policy after repaying the GMAC loan”. He said that he then purchased his present motor vehicle for $13,000.00 (utilising the deposit moneys that had been paid to him in respect of the East Keilor property).
The wife had no, or no significant, assets at the commencement of cohabitation.
The financial contributions made by the husband to the acquisition, conservation and improvement of the East Keilor property and the San Remo property massively outweighed any financial contribution that the wife may have made. In broad terms, the wife’s case is that she assisted the husband in the conduct of the two businesses and that she supported him in the acquisition of the San Remo property. In that respect, her contributions were neither direct nor indirect financial contributions. They were contributions other than in the form of a financial contribution to the acquisition, conservation and improvement of these assets.
In my opinion, however, if the husband had been obliged to pay the wife for the work that she performed in the two businesses, then less moneys would have been available to pay the liabilities associated with their acquisition and preservation. In that sense, the wife has made a (very modest) indirect financial contribution to those assets.
It is not possible to place a monetary value on the wife’s financial and non-financial contributions to the two businesses (and the San Remo property). Nor does the law require that I do so. Nevertheless, the wife’s contributions in this regard must be evaluated and assessed. In that regard, it is important to recognise what Mr Robinson described as “the fractured and sporadic nature of the marriage” (on one hand), and the significant contributions made by the husband’s son, M to the San Remo business (on the other). Further, it is important to recognise that the husband purchased a car for the wife during the relationship.
I take into account, as well, that there was a significant increase in the value of the San Remo property between the date that the husband purchased it and the date that he sold it. It is difficult to see how the wife can be regarded as having made any form of substantial contribution to the increase in the value of the property, although I have recognised the fact that her unpaid work, and the other efforts that she made in establishing and maintaining the San Remo business, amounted to an indirect financial contribution on her part.
Suffice it to say that, in my opinion, the wife’s overall contributions under s.79(4)(a) and (b) over the period of the parties’ relationship was minor. I am of the view that the husband’s financial position over the period of the relationship would have been no different if he had never met the wife. He had conducted a take away business before he met the wife, and I have no doubt that he could have continued to conduct such a business without her input. Still, the fact of the matter is that the wife made the contributions that I have described elsewhere in these Reasons and appropriate weight must be given to them. Thus, although the husband could have run the businesses without the wife’s assistance, the value of the assets now available for distribution between the parties may have been slightly less if the wife had not performed the tasks that she did.
Both parties made contributions to the welfare of their small family. I find that the wife was principally responsible for home making duties whilst the parties resided together. Given the husband’s health, (as he described it in his affidavit material) and the fact that he worked in the two businesses, I find that it is unlikely that he assisted the wife to any great extent in the carrying out of household chores.
There were no children of the parties’ marriage. It appears that M lived with the parties in the San Remo flat for most of the time that the wife lived there. It would appear that the wife’s son, S, also lived with the parties for some time.
When I take into account the very short period during which the parties actually lived together, my evaluation and assessment of the wife’s contributions to the welfare of the family is such that I can do no more than conclude that those contributions were of relatively modest value. Still, for the period that the parties actually resided together, those contributions significantly outweighed those of the husband.
Conclusions Regarding Contribution
The question of how to deal with the totality of the contribution factors is always a difficult one. The Court is obliged to compare like with unlike. I am conscious that the husband’s initial contributions were substantial. In Bremner (1995) FLC 92-560 and Way (1996) FLC 92-702, the Full Court cited with approval a passage from the judgment of Fogarty J in Money (1994) FLC 92-485, as follows:
… an initial contribution by one party may be “eroded” to a greater or lesser extent by the later contributions of the other party, even though those later contributions do not necessarily at any particular point outstrip those of the other party.
In Pierce (1998) 24 FamLR 377 (at 385), the Full Court sought to put Fogarty J’s quotation “in its correct context”. After referring to an expanded passage from Fogarty J’s judgment in Money — in which his Honour said that: “… the respective contributions of the parties over a long period of marriage ‘offset’ the significance which might otherwise be attached to a greater initial contribution by one party” — the Full Court said:
In our opinion, it is not so much a matter of erosion of contribution but a question of what weight is to be attached, in all the circumstances, to the initial contribution. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution … regard must be had to the use made by the parties of that contribution.
The cases referred to above reinforce the fact that the Court must recognise that financial contributions are extremely important in a “short marriage” (or, more correctly, a “short relationship”) case, and that other contributions must be looked at in the context of whether they dilute, erode or otherwise diminish significant financial contributions. In short marriages, a difficulty that is often faced is that the period of the relationship may not be sufficiently long to enable major financial contributions made by one party to be effectively or substantially eroded, diluted or diminished in the broadest sense. Inevitably, much depends upon the nature and quality of the offsetting contributions made by the other party, but there can be no doubt that in a short relationship a significant initial financial contribution is a very important factor indeed.
When I have regard to the parties’ contributions (in all their various guises) over the whole of the period of their relationship, I conclude that the husband’s significant contributions over the whole of the period far outweighed the wife’s contributions (particularly when regard is had to the relatively short period during which the parties actually resided together).
Overall, and doing the best that I can with the evidence available to me, I conclude that an appropriate division of the parties’ property available for distribution between them (as described in the schedule contained in paragraph 39 above) — and on the basis of contribution alone — is something between 5% and 10% to the wife, and the balance to the husband. As it would be intellectually dishonest of me to choose either of those two figures, I conclude that the appropriate split on the basis of contribution should be 7.5% to the wife and 92.5% to the husband.
Section 75(2) Factors
So far, in considering the question of property settlement, I have dealt with the identification of the parties’ property and the question of contribution. The Court has power to make an adjustment to a party’s property settlement entitlement on the basis, amongst other things, of both parties’ respective means and needs. The Family Court has been critical of shorthand terms being used to describe this step in the property settlement exercise, preferring to refer to it simply as “the section 75(2) factors”[9] In essence, s.75(2) is concerned with the process of arriving at a just and equitable result.[10]
[9] See Clauson (1995) FLC 92-595.
[10] See, in that regard, Waters & Jurek (1995) FLC 92-635.
I have already recorded the parties’ ages. The wife is in good health. The husband is not.
The husband is in receipt of a disability pension and has no assets apart from his interest in the property the subject of these proceedings. He has the liabilities referred to in the schedule in paragraph 39 above. He also owes money pursuant to a costs order made in October 2002.
The wife is in receipt of a Newstart allowance and rent assistance. She also has no assets beyond her entitlement to the property the subject of the present proceedings. She has the liabilities referred to in her financial statement.
Notwithstanding the husband’s state of health, I find that he has the capacity to continue to run a business such as a pizza shop — if he were minded to do so. I have already found that, notwithstanding the husband’s state of health, he was able to work in the AG Family Pizza business. I am not persuaded that he could not obtain part time (or even full time) employment in a business such as those that he operated in Rosebud and San Remo. I accept, however, that the husband is unlikely to be able to earn a significant income from such employment.
Notwithstanding the wife’s assertion that she could not continue to work after September 2002 “because of the stress and anxiety caused by these proceedings and the husband’s continued harassment of me”, I find that the wife is capable of obtaining and maintaining employment as a shop assistant or equivalent. Alternatively, she could work in the hospitality industry (for example, in a café, lunch bar or similar).
When I compare the earning capacity of the parties, however, I am of view that neither party has a significantly greater earning capacity than the other.
Neither party has the care or control of any children who are under the age of 18.
The commitments of each of the parties that are necessary to enable them to support themselves are, in my view, likely to be similar. Both parties have a very modest standard of living.
Neither party is obliged to support any other person.
Neither party has any superannuation entitlements, and both are presently in receipt of commonwealth pensions, allowances or benefits.
Both parties are entitled to a standard of living that is reasonable in the circumstances of the case.
The duration of the parties’ relationship has not, in my opinion, affected either parties’ earning capacity. Put bluntly, my view is that both parties could simply return to doing whatever they were doing before they met — if they were minded to do so.
Section 75(2)(o) requires the Court to consider “any fact or circumstance which, in the opinion of the Court, the justice of the case requires to be taken into account”. In my opinion, the disparity in the capital position of the parties reached as a result of the preliminary “split” of the property pool on the basis of contribution alone is such a factor. Alternatively, it is relevant when regard is had to s.75(2)(b) or s.75(2)(g).
There have been many cases over the years in which the Family Court has seen fit to make an adjustment to a party’s entitlement on the basis of contribution alone to take account of a relevant capital disparity. See, for example, Gill (1984) 9 FamLR 969 at 981, Prestwich (1984) 9 FamLR 1069 at 1072, Aleksovski (1996) 20 FamLR 894 at 904 and 909, Brandt (1997) 22 FamLR 97 at 110, VJ & CJ (1997) 22 FamLR 166 at 201, C & C (1998) 23 FamLR 291 at 518, Dickson (1999) 24 FamLR 460 at 473-4, and Collins (1990) 14 FamLR 563 at 565-70.[11]
[11] See also the judgment of Kay J in Farmer & Bramley (2000) 27 FamLR 316 at 330 ff & 341.
Conclusion as to Section 75(2) Factors
Having regard to all the evidence before me, I am persuaded that it is appropriate to make an adjustment on the basis of the s.75(2) factors. This is so because the purpose of the s.75(2) factors adjustment is to assist the Court at the process of arriving at a just and equitable result. To refuse to make an adjustment in the present proceedings would be to run the risk of making orders which are neither just nor equitable.
In my opinion, the most significant of the s.75(2) factors is the enormous disparity in the capital position of the parties reached as a result of the distribution on contributions.
I am very conscious of concepts such as those that were described by Nygh J, in early cases, as “palm tree justice” or “a soup kitchen approach” (in relation to subjects such as the s.75(2) adjustment). Nevertheless, the cases referred to in paragraph 109 above make it clear that the Court is entitled to give appropriate weight to capital disparity where it is relevant. I am well aware that the concept is more commonly used in cases involving long marriages, but, in the present circumstances, it seems to me that a modest adjustment to take account of this consideration is fair and reasonable.
When I have regard to the above matters, together with all the other matters discussed under the general hearing of the s.75(2) factors, I conclude that an appropriate adjustment of the wife’s entitlement on the basis of contribution alone is to increase that entitlement by 7.5%.
It follows that the overall distribution of the property between the parties should be on the basis of 15% to the wife and 85% to the husband.
Just and Equitable?
Although I am of the view that the testing of any proposed orders by reference to s.79(2) is not a fourth substantive step (properly so called) in the property settlement exercise, and although I have considered the justice and equity of the overall “split” under the general heading of “conclusion as to s.75(2) factors”, I propose to (metaphorically) step back and consider whether the outcome achieved by my consideration of the parties’ contributions and the s.75(2) factors has brought about a just and equitable result.
I am very conscious that justice and equity must be done to both parties, and I am satisfied that the split that I have proposed (as described below) achieves that result.
Overall Conclusion
I have already recorded that the total, net value of the property presently available for distribution between the parties is $137,850.00 (approximately). 15% of $137,850.00 is $20,677.50.
It is apparent from the schedule contained in paragraph 39 above that the only other item to be retained by the wife comprises her debts, totalling $3,900.00. Accordingly, if the wife’s overall entitlement is to amount to $20,677.50, then she must receive from the net proceeds of sale of the San Remo property a total amount of $24,577.50.
The fact of the matter is, however, that the precise quantum of the net proceeds of sale of the San Remo property is uncertain. I propose to order, therefore, that the wife receive a percentage of the net proceeds. $24,577.50 as a percentage of $155,000.00 is 15.86% — which I shall round up to 16%.
The costs order for which the husband is liable (and to which reference is made in Mr Robinson’s Case Summary) should be paid from the husband’s share of the net proceeds of sale of the San Remo property — in other words, from his 84% share of the moneys now held in trust. The payment should have no effect upon the wife’s entitlement.
One of the most difficult aspects of the present case is the relatively modest size of the asset pool. The Full Court has cautioned against assessing s.75(2) factors in percentage terms without considering the real impact of any proposed adjustment. In other words, the real impact in money terms and the words in money terms is “the critical issue”[12]. In the present case, the s.75(2) adjustment equates to approximately $10,340.00 (being 7.5% of $137,850.00). I am satisfied that such an adjustment is proper, and just and equitable.
[12] See Clauson (1995) FLC 92-595.
Orders
I propose to make orders to the following effect:
a)The wife is to receive 16% of the net proceeds of sale of the San Remo property presently held in trust.
b)The wife is to retain responsibility for her personal debts as described in her financial statement.
c)The remaining 84% of the net proceeds of sale of the San Remo property are to be received by the husband.
d)The husband is to pay the outstanding costs order from his share of the net proceeds of sale of the San Remo property.
e)The husband is to retain his motor vehicle.
f)The husband is to retain responsibility for his credit card debts.
g)Each party is to otherwise retain the property in his/her possession.
I shall now hear Counsel as to the precise orders that will be necessary to give effect these Reasons.
I, Barbara Mendleson, certify that the preceding one hundred and twenty-three (123) paragraphs are a true copy of the reasons for judgment of Walters FM
Deputy Associate:
Date: 17 November 2004.
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